Nigeria’s central bank has ordered the country’s biggest financial institutions and fintech operators to break up their combined consumer and merchant payments businesses by the end of this year, in a regulatory bombshell that threatens the integrated “super‑app” models built by some of the continent’s most valuable technology companies.
In a circular issued on June 15, the Central Bank of Nigeria (CBN) introduced binding market‑structure requirements that prohibit any licensed entity — individually or as part of a group of related companies — from simultaneously holding more than 25 per cent of the consumer issuing market and more than 15 per cent of the merchant acquiring market, and vice versa.
The rules apply to deposit money banks, mobile money operators, switching companies, payment solution providers and super‑agents, meaning the forced separation will cascade through the entire ecosystem. Groups that breach the caps must restructure or divest assets by December 31 2026.
The circular also mandates the localisation of all payments transaction data within Nigeria from January 2027 and demands the disclosure of ultimate beneficial owners behind significant shareholders, sharpening both the CBN’s oversight of ownership structures and its grip on the country’s financial data infrastructure.
But it is the structural split between issuing and acquiring — the two sides of every electronic payment — that is sending shockwaves through boardrooms from Lagos to San Francisco. Industry executives and lawyers spent the day scrambling to interpret the definition of “group of related entities” and how market shares will be calculated across the fragmented world of wallets, cards, point‑of‑sale terminals and online checkout gates.
A direct attack on concentration
Consumer issuing covers the provision of payment instruments to individuals — bank cards, mobile wallets and app‑based accounts used to make purchases. Merchant acquiring covers the services that enable businesses to accept those payments, whether through POS devices, QR codes or online gateways. Owning both ends of the chain has been the holy grail for Nigerian fintechs, because it allows a single group to capture the interchange and processing fees on every transaction, cross‑sell credit, and lock in both consumers and merchants with network effects.
The CBN now views that concentration as a systemic risk. The circular notes “rapid growth in electronic payments, increasing adoption of digital financial services, and the emergence of operators with substantial market presence” that have raised concerns about “market concentration, operational dependence, systemic importance, transparency of ownership structures, and the localisation of critical payment data”.
In plain language, the regulator is telling the market that no single conglomerate should be big enough to fail — or big enough to dictate terms to every layer of the payments stack. The 25 per cent/15 per cent asymmetry is designed to force groups that are dominant in one activity to remain no more than a minority player in the other.
“This is an anti‑trust measure delivered through prudential regulation,” Lagos-based lawyer Charles Udoh said. “The CBN is effectively saying that if you control more than a quarter of all consumer wallets in Nigeria, you cannot also be the one processing payments for a large swath of merchants. The platform economics that these groups have built over the past five years are being dismantled by fiat.”
The rules catch groups of related entities, not just single corporate entities, meaning fintechs cannot evade the cap by parking an acquiring business in a separate subsidiary under the same holding company. According to lawyers reviewing the circular, the CBN will assess common control, shared directors, overlapping shareholders and economic interdependence when deciding whether two entities form part of the same group. That puts pressure on complex corporate structures that often involve parent companies registered in Delaware, the Cayman Islands or Mauritius.
The companies in the crosshairs
While the CBN did not name individual institutions, several of Nigeria’s highest‑profile fintech groups are widely expected to be affected. OPay and PalmPay, both backed by Chinese and local investors, have built enormous agent‑led consumer wallet networks that issue millions of accounts to previously unbanked Nigerians. At the same time, each has been aggressively expanding its merchant acquiring footprint through POS terminals and payment aggregation services for small businesses.
Moniepoint, which evolved from a pure‑play agency banking provider into a business payments platform, could also find itself straddling the two sides at a scale that triggers the caps. Even traditional lenders are not immune: tier‑one banks such as Guaranty Trust Holding Company and Access Holdings run large card‑issuing programmes alongside merchant acquiring businesses that process payments for thousands of retailers.
The vast majority of Nigeria’s electronic transactions flow through a handful of switches and processors — Interswitch, NIBSS, and the card schemes — but the licensing categories captured by the circular extend deep into the fintech middle layer. Payment Solution Service Providers such as Flutterwave and Paystack dominate online merchant acquiring, though their consumer‑facing issuing activities are limited, meaning the forced split may affect them less directly than the wallet‑heavy super‑apps.
Still, the obligation to submit monthly market share returns to the CBN will make every operator’s position visible to competitors and regulators alike. “Everyone will know exactly who is over the limit, and by how much,” Udoh said. “The data reporting alone changes the competitive dynamics. You cannot quietly manage your position any more.”
A scramble to restructure
The eight‑month compliance deadline leaves very little time for groups that need to unwind deeply integrated operations. Fintech platforms often share technology infrastructure, treasury functions, liquidity pools and customer data between their issuing and acquiring arms. Separating them could mean splitting balance sheets, renegotiating commercial contracts, migrating millions of customer accounts and applying for new licences — or, more drastically, selling entire business lines.
Some investors fear that the forced separation will destroy the integrated unit economics that justified lofty valuations in recent funding rounds. Fintechs that raised hundreds of millions of dollars on the promise of building end‑to‑end platforms may now have to shrink their addressable revenue pools, potentially breaching investor return expectations.
The CBN, however, has made clear it will impose supervisory sanctions on non‑compliant institutions, which can range from monetary penalties to restrictions on operations or even licence revocation. In previous regulatory actions — including a 2024 directive that temporarily froze new fintech licence approvals — the central bank has demonstrated a willingness to move fast and worry about industry complaints later.
Data and ownership under tighter control
The circular’s other two pillars reinforce the CBN’s broader tightening of the regulatory net. On data localisation, all payments transaction data generated within Nigeria must be stored and managed inside the country by January 1 2027, aligning with data protection legislation but going further by targeting the hosting arrangements of global cloud providers used by many fintechs. This will force operators currently relying on foreign data centres to migrate their core systems to Nigerian facilities, adding cost and complexity.
The ultimate beneficial ownership disclosure rule, meanwhile, closes a longstanding opacity loophole. Fintechs must now identify and verify the natural persons who ultimately own or control them, keep records updated, and provide the information to the CBN on demand. This is expected to reveal the extent of foreign and politically exposed ownership across the sector and could complicate future fundraising from investors that prize discreet holding structures.
A new competitive landscape
For the wider Nigerian payments market, the structural separation is likely to reset the competitive landscape. Dominant groups will be forced to withdraw from one activity, creating space for smaller players and new entrants. Agent networks that today serve as both consumer touchpoints and merchant collectors may need to split their affiliations, potentially reducing the reach of super‑agents who have built multi‑service storefronts.
International payment networks and banks that have been losing ground to agile fintechs may see an opportunity to regain share in acquiring or issuing, while local infrastructure providers and data centre operators stand to benefit from the localisation mandate.
Yet the rule also carries risks. If dominant groups exit acquiring, merchant service quality could temporarily suffer, and the fragmentation of agent networks might slow financial inclusion in rural areas. “The intention is noble — more competition, less systemic risk — but the execution will be messy,” Udoh said. “Policymakers will need to watch whether this genuinely opens the market or simply shuffles concentration from one set of hands to another.”
The CBN’s circular ends with a terse promise to monitor compliance and impose sanctions where necessary. Nigeria’s payments pioneers, who spent a decade building integrated empires on the thesis that scale would bring both profits and resilience, now have six months to prove they can survive a world that no longer permits them to be large on both sides at once.